Can co-ops beat the cash crisis threatening the UK’s regions?

Campaigns from Cles, Co-operatives UK, Save Birmingham and the Co-op Party are calling for new models of local ownership and control

As the financial crisis affecting local authorities and high streets across the UK deepens, the co-op movement is continuing its efforts to curb the damage and bring in more democratic models of ownership and control.

The scale of the problem hit home last year when Birmingham City Council declared bankruptcy after buckling under the pressure of central government funding cuts alongside internal problems such as a £760m bill for equal pay claims and an £80m overspend on the Oracle IT project.

Fearing the crisis could spark the privatisation of assets across the city, Co-operatives West Midlands set up the Save Birmingham campaign to encourage the transfer of council properties to community ownership.

The initiative won the backing of Birmingham councillors but the situation has continued to look bleak. At the beginning of March, the council budget meeting saw the axing all of funding to arts and culture organisations over the next two years. There was some good news to follow when chancellor Jeremy Hunt announced £10 of funding for culture in the West Midlands in his spring budget, with a pledge to match this from the combined authority mayor Andy Street.

But this money will be shared across the region, and Richard Parker, Labour’s candidate for the West Midlands mayoralty, said the £20m is “mere crumbs” in the context of local government funding cuts.

Meanwhile other councils, including Nottingham and Woking, have declared bankruptcy and more are on the brink, with MPs on the levelling up, housing and communities committee warning that local authorities will need a £4bn cash injection from Westminster to stay afloat.

In January, the Department for Levelling Up, Housing and Communities, led by Michael Gove, mooted plans to encourage councils to sell publicly owned buildings and other assets worth up to £23bn – replicating the threat to community spaces on a national scale.

Related: Co-operators mobilise to save Birmingham’s community spaces

In response, Jeevan Jones of the Save Birmingham campaign told Co-op News: “Once community places are lost, they’re lost forever. Instead of ‘fire sales’ that leave people and places worse off, councils should instead explore ‘community first’ alternatives.

“These could see residents run or own their community places, and indeed make use of the government’s own Community Ownership Fund, which was designed for this purpose. At the Save Birmingham campaign, we’re happy to share our learning and experiences with other by groups, using the ‘Birmingham blueprint’ for protecting community places.”

A new blueprint?

The financial squeeze lays bare the issues facing local economies, which has for several years seen parts of the co-op movement champion a change of emphasis on local authorities to one of “new municipalism“, blending community ownership with community wealth building – which targets spending by local authorities, hospitals, universities and other ‘anchor institutions’ on local businesses instead bringing in large corporate outsourcers which extract capital from the area.

One of the architects of community wealth building is the Centre for Local Economic Strategies (Cles), which is running the five-year Reclaiming Our Regional Economies (Rore) programme alongside Co-operatives UK, the New Economics Foundation (Nef) and Centre for Thriving Places (CTP).

Funded by funded by the National Lottery Community Fund, Friends Provident Foundation, the Barrow Cadbury Trust and Power to Change, Rore aims to “rewire local and regional economies to deliver more equitable and sustainable outcomes and better lives for millions of people”.

Pilot projects are being run in West Midlands, South Yorkshire and the North East, taking a range of policy areas including transport, housing, health and economic development.

Related: Co-operatives UK co-helms scheme to boost social economy in Greater Manchester

Helen Power, head of communications at Cles, told Co-op News: “Our country is the most regionally unequal in the developed world, with one of the most centralised systems of government on the planet. The levelling up agenda was trumpeted as an attempt to redress some of the economic imbalances created by this and was advertised as an opportunity to bring economic development and power back to regional communities.

“But it’s not happened. The reality is that most people living in a combined authority area don’t know who their mayor is, let alone what powers their combined authority holds. Rore is about getting to the heart of that problem, experimenting and exploring with communities how things could be done better and designing ways to put their needs back into the decisions that are made at the combined authority level.”

She added: “In our first year working on the programme we have spoken and worked with thousands of people – from mayors to officers, citizens to community groups, health leaders to business people. We’ve already learned a lot about what real devolution could mean, the transformation it could set off, and the barriers to it that any future government urgently need to address. We can’t wait to learn more.”

An update on Cles’s website added: “With new devolution settlements coming into force in Greater Manchester and the West Midlands, and with more areas set to follow suit – including the North East, as announced in last week’s spring budget – combined authorities are bringing clout, spending power and scale to our regions for the first time in a long time. This means that leaders have the opportunity to experiment with different ways of doing things.

“They can explore how local levies and powers can be used to encourage sustainable and equitable economic development as well as how new powers over transport, health and housing can put people and communities in the driving seat of decision-making. This is a moment of huge potential, with the door at least partially open to build a new way of doing economic decision making at a scale not seen before.”

Related: Report from Cles’s Community Wealth Building Summit

Cles added: “In our first year, we’ve already begun to understand the differences between the governance approaches of the three different combined authorities and how they engage communities in decision making, bringing people together with anchor institutions and facilitating joint working across public, private and voluntary, community or social enterprise organisations..

“In the remaining four years of the programme, the partners in Rore will co-create and communicate a new vision for this country’s regions which is inclusive, dynamic and rejects the cookie-cutter model for economic development and growth dictated by the Treasury. We will articulate the demands and desires of the regions for more devolution and control over their destinies, advocating a path to economic growth and development which puts building community wealth at the heart of visions for future regional economies.”

What will a new government bring?

A general election, to be held in January 2025 at the latest, is expected to deliver a Labour government but shadow chancellor Rachel Reeves has worked to dampen expectations of a spending boost, warning that she will inherit the UK’s “worst economy since Second World War”.

On 10 March she told Sky News’s Sunday Morning with Trevor Phillips that she would not be bailing out bankrupt councils, adding: “I’m not going to be able to fix all the problems straightaway.

“I’m under no illusions about the scale of the challenge that I will inherit if I become chancellor later this year and I need to be honest with people … My focus is on reforming the planning system to get Britain building again.

“If we do those things, we will bring in the tax revenue and we will be able to invest in public services again. There’s no shortcuts. That is the way.”

Related: Labour drops £28bn green pledge but commits £3.3bn to Local Power Plan

With Keir Starmer looking ever more likely to become next PM, co-op and social economy advocates are just one of a host of interest groups courting Labour – including outsourcing companies, with scandal-hit Serco sponsoring an Institute for Government fringe panel at last year’s party conference.

But Labour’s sister organisation, the Co-op Party, is fighting the movement’s corner. On 14 March, policy officer Daniel Monaghan sang the praises of community ownership in a blog on the Party website.

“Recent years have seen community-owned projects deliver results in Liverpool, Plymouth, Bristol and many more,” he wrote. “These initiatives have helped to rejuvenate dilapidated and disused assets, to create new areas for community led projects in retail, leisure and business – such as the Baltic Triangle in Liverpool.”

And there is public appetite for more, said Monaghan, pointing to figures from Plunkett UK which shows there are currently 3,399 prospective Assets of Community Value (ACVs) listed by communities – which could be purchased and converted to community ownership. Pubs are the most commonly listed asset, making up 41% of ACVs listed, with green spaces and community hubs being the next most common.

“The growing list of ACVs is a clear indication communities care deeply about local institutions and spaces,” added Monaghan, “particularly when they’re threatened with loss and closure. The financial crises many local authorities find themselves in will mean more public and community assets are put at risk than ever before. As local authorities desperately try to sell off assets to make ends meet, community ownership could help to ensure these assets stay in the hands and use of local community groups – providing essential goods, services and spaces people rely on.

Local community ownership will have a big role to play in rebuilding Britain under a potential future Labour & Co-operative government. As a party, we will be continuing to campaign for a strengthened new Community Right to Buy – so that the demand for community ownership can be fully realised.”